Global AI Market Correction Triggers Bear Market for Nikkei and Trading Halts in South Korea

Global financial markets are experiencing a significant period of volatility as the long-running rally in artificial intelligence (AI) stocks begins to fade. The shift in investor sentiment has pushed Japan’s Nikkei 225 index into technical bear market territory, while South Korean markets were forced to implement emergency trading halts to curb panic selling.

In Japan, the Nikkei 225 saw a sharp decline, dropping nearly 7% in recent sessions as tech-heavy portfolios faced intense liquidation. Analysts suggest that the correction is a result of stretched valuations and a broader reassessment of the AI sector’s growth potential. While some institutions, such as JPMorgan, have suggested that Japanese stocks are currently oversold and may present opportunities for valuation recovery, the immediate market reaction has been overwhelmingly bearish.

Simultaneously, South Korean markets faced severe downward pressure, with major tech giants like Samsung Electronics and SK Hynix seeing their share prices plummet by over 10%. The rapid decline forced the Korea Exchange to trigger circuit breakers to prevent a total market collapse. Investors are increasingly concerned that the ‘AI bubble’ is bursting, leading to a flight from risk assets across the Asia-Pacific region.

Market observers point to a combination of factors driving this downturn, including rising geopolitical tensions, shifting monetary policies, and a cooling of the tech-driven optimism that fueled market gains throughout the previous year. As volatility persists, financial regulators in both Tokyo and Seoul are closely monitoring the situation, warning that they may take necessary measures to prevent excessive market fluctuations. The coming weeks will be critical in determining whether this is a temporary correction or the beginning of a more sustained downturn in global equity markets.

Sources: East Money

Aggregated summary. Original: 东方财富